Fears of redundancies as two big banks merge after market chaos
By ROSALIND GRIFFITHS
EMPLOYEES of local banks were re-assured yesterday that there will be no rush to slash jobs following the takeover of HBOS by Lloyds TSB.
It gives security at least in the short term to staff in Lerwick branches of the banks, which number around 15 across retail and banking departments in the Bank of Scotland and eight at Lloyds TSB.
Customers also will not see any difference in their banks for the next few months.
A spokesman from Lloyds TSB said yesterday: “It really is very early days and how the takeover will take shape and be played out throughout the country will become clearer over the next few months. At the moment things will remain exactly as they are.”
However job losses could not be ruled out, he said.
“When two companies come together change would not be a surprise and we are never going to rule anything out.”
He said customers could be “re-assured” that their money would be safe in local branches of both banks.
A spokesman from HBOS also stressed that customers’ money was safe. “This takeover will create one of the strongest banks on the planet.”
Asked about job losses and branch closures, he said it was “far too early to say” but said: “The management focus is very much to keep jobs in Scotland.”
He said the bank would continue to print Bank of Scotland banknotes and to use the Mound in Edinburgh as its headquarters.
The Bank of Scotland would remain “an important company around the world”, he said.
The £12.2 billion takeover will create a banking giant with a third of the mortgage and savings markets.
But analysts say job losses are inevitable in the takeover. HBOS has around 70,000 staff throughout the country and Lloyds TSB around 75,000. Of the combined total of 145,000, they predict that up to 40,000 could go.
Branches could also close. There will be “elimination of branch duplication” throughout the UK – HBOS has 1,100 branches and Lloyds TSB 1,900.
UK government business secretary John Hutton said that the government would push through the merger “to ensure the stability of the UK financial system”.
Prime Minister Gordon Brown said the government was determined to maintain a stable financial system and protect savers.
The deal followed a tumultuous week in the international financial system which resulted in the collapse of US investment bank Lehman Brothers, the rescue of giant insurer AIG with an $85 billion injection of cash from the US Treasury the acquisition by another investment bank, Merrill Lynch, by Bank of America.
Billions of dollars were pumped into the money markets by central banks around the world yesterday to try to prevent the credit system from seizing up. Russia’s stock market was suspended after sharp falls in share prices.
Chancellor Alistair Darling told the BBC: “We were onto their [HBOS’s] problem for several weeks. It didn’t just suddenly happen.”
Lloyds chief Eric Daniels was keen to stress that the takeover had not been forced on HBOS.
“There shouldn’t be any impression this is a shotgun marriage or a forced marriage, this is something that’s been looked at for a good long while,” he said.
The new bank will hold a third of the UK mortgage market, but competition watchdogs will not block the deal.